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WHILE NOT A UNIFORM ENDORSEMENT of the sector as a whole, stock scans in search of price strength and technical improvements have flagged biotech as a place to mine for opportunities.

Because of the diversity of the biotech sector, latching on to an index or sector exchange-traded fund does not seem to be the way to gain proper exposure to these stocks. Indeed, the widely watched American Stock Exchange biotech index, to which many refer by its ticker BTK, has merely tracked the performance of the broad market over the past five months.

But when we look for stocks with the above mentioned attributes, we can find a decent list of candidates for purchase. Of course, the caveat is the overall jumpy state of the market. And I'll add my own view that the rally from the November low is of the bear market variety and therefore will not last.

Unfortunately, in this market where volatility is the norm, Amgen has had its share. If we look at how price action on the stock alone has unfolded over the past few months using moving averages, we can paint an equally positive picture.

In July, when the stock jumped up 12% on good news on its research front, a bullish technical signal fired. Its 50-day exponentially smoothed moving average crossed above its 200-day average. Chart watchers call this a "golden cross" as it is often signifies the end of a bearish phase and the beginning of a bullish phase.

That was the good news. The better news is that all through the market's autumn tumble, Amgen has maintained this crossover and that bodes well for the future.

Further technical evidence for the bulls is that fact that the stock's November low was higher than its October low. In contrast, the S&P 500 set a lower low. Apparently, when the market started to selloff after the election, Amgen was one stock investors were reluctant to sell.

Another biotech stock with a golden cross and an overall rising trend in 2008 is
Osiris Therapeuticsosir 5.058365758754864%Osiris Therapeutics Inc.U.S.: NasdaqUSD5.4
0.265.058365758754864%
/Date(1481320800379-0600)/
Volume (Delayed 15m)
:
190616AFTER HOURSUSD5.4
%
Volume (Delayed 15m)
:
1332
P/E Ratio
N/AMarket Cap
177088410.851078
Dividend Yield
N/ARev. per Employee
411710More quote details and news »osirinYour ValueYour ChangeShort position
(OSIR), which operates in the stem cell area. This stock was hit very hard in September and October, but bounced right back in only a few weeks' time (see Chart 2).

Chart 2

To be sure, this is not a widows and orphans type of stock as it plunged from a high near 20 in September, to its October low near 11 -- a 45% loss in less than two months. And its rebound back to 20 represented an 81% gain! But if we can accept the volatility we can see that since last month it has bounced off its 50-day average not once but twice -- something chart watchers like to see.

For those who believe in that a bear market rally is indeed underway and can handle the risk, this stock is able to deliver quite a boost to the bottom line.

While risk has been the name of the game lately, we can still find ways to reduce it. By matching technically sound conditions with a fundamental kicker, such as good earnings growth, we can increase the odds for success.

Cubist Pharmaceuticals
(CBST) sports the golden cross of its moving averages and has also bounced off its 50-day average twice (see Chart 3).

Chart 3

From the fundamental side, it ranks in the 84% percentile for earnings growth according to the High Growth Stock Investor database of 8000 securities. The combination should mitigate at least some of the risk from this very volatile stock and tip the scales in favor of the bullish case.

Again, a portion of the argument for biotech stocks hinges on the overall state of the market. No sectors, in my view, have the staying power to survive another market meltdown. But if the market can continue to show that it is healing, select biotech stocks seem to have the right stuff to actually earn some profits for investors during what seems to be a bear market rally.

I'll end with my usual warning not to overstay your welcome, because bear market rallies by definition take place in declining markets.

Getting Technical Mailbag:Send your questions on technical analysis to us atonline.editors@barrons.com. We'll cover as many as we can, but please remember that we cannot give investment advice.

Michael Kahn, author of three books on technical analysis, former Chief Technical Analyst for BridgeNews and former director for the Market Technicians Association, also blogs at www.quicktakespro.com/blog.